While institutions own 29% of Hengli Petrochemical Co.,Ltd. (SHSE:600346), retail investors are its largest shareholders with 34% ownership

Key Insights

• Hengli PetrochemicalLtd's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 3 shareholders own 57% of the company
• Insiders own 22% of Hengli PetrochemicalLtd

If you want to know who really controls Hengli Petrochemical Co.,Ltd. (SHSE:600346), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 34% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Institutions, on the other hand, account for 29% of the company's stockholders. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones.

Let's delve deeper into each type of owner of Hengli PetrochemicalLtd, beginning with the chart below.

Check out our latest analysis for Hengli PetrochemicalLtd

What Does The Institutional Ownership Tell Us About Hengli PetrochemicalLtd?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Hengli PetrochemicalLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Hengli PetrochemicalLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Hengli PetrochemicalLtd. From our data, we infer that the largest shareholder is Hongwei Fan (who also holds the title of Senior Key Executive) with 22% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. Hengneng Investment (Dalian) Co., Ltd. is the second largest shareholder owning 21% of common stock, and Hengli Group Co.,Ltd holds about 14% of the company stock.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Hengli PetrochemicalLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders maintain a significant holding in Hengli Petrochemical Co.,Ltd.. It is very interesting to see that insiders have a meaningful CN¥21b stake in this CN¥98b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 34% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 15%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Hengli PetrochemicalLtd you should be aware of, and 1 of them is significant.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.